Imminent Crisis - Netflix

Editor

Yang Mu Chu and Yang Mu Ci were twin brothers separated at a young age
who grew up under very different circumstances during chaotic times in
1930s Shanghai. Overcoming initial misunderstandings and other
obstacles, the two eventually join forces to expose and foil a dangerous
Japanese military conspiracy.

Type: Scripted

Languages: Chinese

Status: Ended

Runtime: 60 minutes

Premier: 2012-04-27

Imminent Crisis - Mexican peso crisis - Netflix

The Mexican peso crisis was a currency crisis sparked by the Mexican
government's sudden devaluation of the peso against the U.S. dollar in
December 1994, which became one of the first international financial
crises ignited by capital flight. During the 1994 presidential election,
the incumbent administration embarked on expansionary fiscal and
monetary policy. The Mexican treasury began issuing short-term debt
instruments denominated in domestic currency with a guaranteed repayment
in U.S. dollars, attracting foreign investors. Mexico enjoyed investor
confidence and new access to international capital following its signing
of the North American Free Trade Agreement (NAFTA). However, a violent
uprising in the state of Chiapas, as well as the assassination of the
presidential candidate Luis Donaldo Colosio, resulted in political
instability, causing investors to place an increased risk premium on
Mexican assets. In response, the Mexican central bank intervened in the
foreign exchange markets to maintain the Mexican peso's peg to the U.S.
dollar by issuing dollar-denominated public debt to buy pesos. The
peso's strength caused demand for imports to increase in Mexico,
resulting in a trade deficit. Speculators recognized an overvalued peso
and capital began flowing out of Mexico to the United States, increasing
downward market pressure on the peso. Under election pressures, Mexico
purchased its own treasury securities to maintain its money supply and
avert rising interest rates, drawing down the bank's dollar reserves.
Supporting the money supply by buying more dollar-denominated debt while
simultaneously honoring such debt depleted the bank's reserves by the
end of 1994. The central bank devalued the peso on December 20, 1994,
and foreign investors' fear led to an even higher risk premium. To
discourage the resulting capital flight, the bank raised interest rates,
but higher costs of borrowing merely hurt economic growth. Unable to
sell new issues of public debt or efficiently purchase dollars with
devalued pesos, Mexico faced a default. Two days later, the bank allowed
the peso to float freely, after which it continued to depreciate. The
Mexican economy experienced hyperinflation of around 52% and mutual
funds began liquidating Mexican assets as well as emerging market assets
in general. The effects spread to economies in Asia and the rest of
Latin America. The United States organized a $50 billion bailout for
Mexico in January 1995, administered by the IMF with the support of the
G7 and Bank for International Settlements. In the aftermath of the
crisis, several of Mexico's banks collapsed amidst widespread mortgage
defaults. The Mexican economy experienced a severe recession and poverty
and unemployment increased.